HP Says Oracle Violated Contract, Seeks Billions

Oracle Corp
violated a clear contract with Hewlett-Packard Co when
it decided it would no longer make new versions of its database
software compatible with HP's Itanium-based servers, a lawyer
for HP said in court.

Oracle Corp
violated a clear contract with Hewlett-Packard Co when
it decided it would no longer make new versions of its database
software compatible with HP's Itanium-based servers, a lawyer
for HP said in court.

As the two firms faced off on Monday in opening statements
in a bitter lawsuit over Oracle's decision to end support for
Itanium, an Oracle attorney countered that Oracle had never
agreed to give up its business flexibility in the "brief,
breezy" contract language cited by HP.

The trial, in which HP seeks up to $4 billion in damages,
comes just days after Oracle lost a separate high-stakes case
against Google Inc over smartphone technology.

Oracle decided to stop developing software for use with
Itanium last year, saying Intel made it clear that the chip was
nearing the end of its life and was shifting its focus to its
x86 microprocessor.

But HP said it had an agreement with Oracle that support for
Itanium would continue, without which the equipment using the
chip would become obsolete. HP said that commitment was affirmed
when it settled an earlier lawsuit over Oracle's hiring of
ousted HP chief executive Mark Hurd.

In court on Monday, HP lawyer Jeffrey Thomas said the Hurd
settlement clearly bound Oracle to continue offering its "best
products" to HP.

As a sign of the importance of the contract, top executives
from both companies -- including Oracle President Safra Catz and
then-HP enterprise chief Ann Livermore -- negotiated the deal,
Thomas said.

"It is impossible to offer best products going forward
without porting new versions of those products," Thomas said.

However, Oracle attorney Dan Wall said the Hurd settlement
language was merely designed to settle employment litigation
that HP had initiated against Oracle. It was not backed by the
kind of painstaking negotiation that takes place over a
strategic business partnership, he said.

Itanium is a declining product, Wall said.

"HP is trying to force Oracle to support a technology,
Itanium, that Oracle does not believe in," Wall said.

LIVERMORE FIRST WITNESS

Instead of a jury, Santa Clara Superior Court Judge James
Kleinberg will decide the first phase of the trial -- namely,
whether there is a contract between HP and Oracle, and its
terms.

If Kleinberg decides in HP's favor, then a jury will decide
whether Oracle violated the contract, and damages.

In court last month, Kleinberg compared the case to a
divorce, saying "this case appears to be the end of a marriage"
between the technology giants.

Top officials from both Oracle and HP could take the stand
and HP's Livermore, who is now a board member, was the first
witness from HP's side.

Livermore, who served as the top liaison from HP's side for
the Itanium product, said in her testimony that Catz from Oracle
had reassured her and the company after Oracle bought Sun
Microsystems in early 2010, saying Oracle's software sales will
be "platform neutral".

"She said they were going to continue to support HP,"
Livermore told the judge, adding that Catz reiterated the same
in a larger meeting between executives from both companies.
But after Hurd joined Oracle in late 2010, HP became
concerned.

"I was concerned that Mark was leaving HP with ill will
toward HP," she said in her testimony. "My concern was he knew
our financials. He knew our dependence on Itanium he knew lots
and lots of things."

Livermore will continue her testimony on Tuesday.
Intel Corp is not a party in the lawsuit, although
its CEO, Paul Otellini, might also testify.

The case in the Superior Court of the State of California,
County of Santa Clara is Hewlett-Packard Company v. Oracle
Corporation, No. 11-CV-203163.
(Reporting by Dan Levine and Poornima Gupta; Editing by Tim
Dobbyn, Lisa Von Ahn and Edwina Gibbs)